The Hindu Business Line : When a professional teaches part-time

I am a chartered accountant and also a visiting professor at a management institute. The institute deducts tax at source from my fees under Section 194J discarding the contention of people like me that the section does not apply to visiting professors. Do advise.

Tanmay Patnaik, Bhubaneshwar

An analysis of Section 194J shows that tax needs to be deducted thereunder if fees for professional or technical services in excess of Rs 20,000 during the financial year to a payee are proposed to be paid.

To be sure, a chartered accountant is a professional, but what he is offering to the institute is not his professional service like audit or tax consultancy but teaching services.

Teaching does not come under the notified professions. There have been instances of institutes targeting visiting professors sans professional qualifications as well on the ground that teaching is also a profession. The truth is Section 194J is simply not on in respect of payment for teaching services, whether offered by a professional or other.

Depreciation explained

Is depreciation a source of cash?

NRK Marimuthu, Namakkal

Students of finance often don’t hide their scepticism bordering on the disdain when told that depreciation is a source of cash in the context of preparation of cash flow statement. How it can bring in cash when one admittedly has actually paid money for acquiring an asset, they ask in genuine horror at the seeming gaffe of the authors of books on finance.

Well, I think the students’ criticism is valid. Indeed it is all right to call depreciation a source of cash in a manner of speaking. But strictly speaking, it is not.

The accounting standards do not say that depreciation is a source of fund or cash. The truth is without adding back the amount of depreciation, it is not possible to find out the profits from operations which constitute the major source of funds or cash for any organisation given the fact that depreciation is admittedly non-cash expenditure.

Therefore the most appropriate description of depreciation would be not to call it a source of fund but to explain its adding back to the figure of profit as being necessary to find out the true cash profits.

Loan for buying property

I am working for the salary-drawing unit of an organisation. Some of our employees have taken housing loan to purchase two properties. Can we extend the benefit under Section 80(C) and Section 24 for both the properties for TDS purpose after taking into account the notional income for one property?

Harshad Tirodkar, email

Both Sections 54 and 80C are marked by this avoidable controversy. Both use the expression ‘a residential house’ fortifying the view that Parliament does not want to give the tax benefits contained in the twin sections to more than one house.

But the judicial opinion in the context of Section 54 is divided with the argument that ‘a’ means ‘any’ meeting with approval in some forums.

The other argument advanced by the more-than-one-house school is that Parliament should not be averse to granting deduction in respect of repayment of loans pertaining to more than one house given the fact that it has set a ceiling of Rs 1 lakh under Section 80C and should not be bothered about how it is taken.

This argument impressive as it is obviously cannot stand legal scrutiny given the fact that equity and logic cannot hold sway before a fiscal law. Parliament should spell out the things in simple English.

S. MURLIDHARAN

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